NeXT has made the decision to become a software company in order todevote all of its resources to becoming a leader in object-orientedsoftware for client/server computing.

CONTENTS

I. Overview: From Hardware to SoftwareII. NeXT's Opportunity: To Lead the Object-OrientedSoftware MarketIII.Why NeXT Will Lead the MarketIV.NeXTSTEP and Corporate Computing in the `90'sV.NeXT in Transition

I. OVERVIEW: FROM HARDWARE TO SOFTWARE

Over the past two years, NeXT has been successful in selling itsobject-oriented NeXTSTEP systems to major corporations, governmentinstitutions and higher education. In 1992, sales increased 10%worldwide to reach $140 million. Commercial acceptance of NeXTSTEP,coupled with the commoditization of the hardware business, hasconvinced NeXT to choose being a first-tier software company leadingthe object-oriented computing revolution over being a second-tiersupplier of hardware in a market increasingly differentiated merelyby hardware price/performance.

NeXT'S MISSION

--------------------------------------------------------------------Mission: to lead the object-oriented computing revolution.--------------------------------------------------------------------

NeXT's mission is to provide state-of-the-art, robust and reliableobject-oriented software that allows users to rapidly develop anddeploy client/server applications. NeXT's corporate goal is to be anindustry leader in object-oriented computing on the broadest array ofmainstream hardware platforms. NeXTSTEP is currently shipping in alimited release for Intel platforms and will be available in anunrestricted release in May. NeXT plans on making NeXTSTEP anindustry standard available on a number of popular, high-performancearchitectures.

--------------------------------------------------------------------Product lines: object-oriented system software, development tools,reusable objects and groupware available on mainstream hardware.--------------------------------------------------------------------

As NeXT moves forward, the company will emphasize technologies whereNeXT adds unique value. NeXT will invest in four product lines:

For the past year, NeXT has been evolving toward a purelysoftware-driven company, beginning in January, 1992, with theannouncement of NeXT's plans to port NeXTSTEP to the Intelarchitecture.

For the past eighteen months, NeXT's customers have advocated thatNeXT become a software-only company. This course of action madeincreasing sense as a new generation of broadly available,inexpensive and appropriate hardware for NeXTSTEP began shipping in1992. With the arrival of NeXTSTEP on Intel processors, NeXT has madethe decision to cease designing and manufacturing its ownNeXTstation hardware.

This customer-driven decision was made for several reasons. First,NeXT's customers want the benefit of NeXTSTEP on industry-standard,user-customizable platforms available from multiple suppliers. Toencourage the broadest possible acceptance of NeXTSTEP on the widestrange of hardware, NeXT understood that it needed to level theplaying field as a platform-neutral software supplier and givecustomers maximum choice and flexibility in the selection of hardwareto run NeXTSTEP.

Second, NeXT's customers want NeXTSTEP to proliferate broadly oncorporate desktops and to capture significant market share. For thepast year, NeXT has realized that the goal of broad market share forNeXTSTEP was at odds with the goal of winning acceptance for aproprietary hardware platform. In the past, to adopt NeXTSTEPrequired making a commitment to NeXT's own hardware as well as toNeXTSTEP itself. In the future, because of the widespreadavailability of Intel hardware, the NeXT-related costs of deployingNeXTSTEP widely will be significantly reduced, resulting in shortenedtechnology adoption and procurement decisions.

Third, today, many hardware vendors offer inexpensive and powerfulplatforms capable of running NeXTSTEP well and freeing NeXT to investin those software technologies to which NeXT can add unique value.

--------------------------------------------------------------------Focusing on the mainstream expands the market for all NeXTSTEPdevelopers.--------------------------------------------------------------------

Finally, one of the most compelling reasons for focusing all ofNeXT's energies on industry-standard platforms is to expand the sizeof the NeXTSTEP marketplace. Today, more than three hundredapplications ship for NeXTSTEP, including products from WordPerfect,Oracle, Sybase, Adobe, Lotus, Insignia, Altsys, Pages, Lighthouse andAppsoft. NeXT's focus on expanding the market share for NeXTSTEP onstandard hardware platforms should greatly increase the number ofapplications available for NeXTSTEP during the next year.

II. NeXT'S OPPORTUNITY: TO LEAD THE OBJECT-ORIENTED SOFTWARE MARKET

"Few in the industry dispute that NeXTSTEP accomplishes today what Taligent, Microsoft and others are aiming for by 1995."

Open Information Systems, January 1993

--------------------------------------------------------------------"It's NeXTSTEP system software is years ahead of its potentialrivals, such as Microsoft's Cairo and Apple and IBM's Taligentsystems." -Business Week, January 25, 1993--------------------------------------------------------------------

A broad spectrum of industry analysts predicts that object-orientedsystems software will be one of the most important enablingtechnologies of the 1990's. The market for desktop object-orientedsystems software, in its infancy today, will be enormous. Accordingto initial estimates from International Data Corporation (IDC),annual revenues from object-oriented system software will surpass $2billion by 1996, exceeding revenues from traditional desktopoperating systems.

With 50,000 users, NeXTSTEP has the largest installed base ofobject-oriented systems software in the industry. NeXT also enjoys aseven-year lead in developing object-oriented software, a lead thathas allowed NeXTSTEP to mature as a complete and integratedarchitecture. NeXTSTEP will have already shipped its fourth releaseby the time that NeXT's only foreseeable competitors Microsoft'sCairo and Taligent's OS ship the initial release of their products intwo to three years.

--------------------------------------------------------------------NeXTSTEP will be in its fourth major release before Cairo or Taligentship their first release.--------------------------------------------------------------------

--------------------------------------------------------------------"`NeXTSTEP is the only object-oriented environment out there,' saidNancy Battey, an analyst at IDC in Mountain View. `They have a hugelead.'" -San Jose Mercury News, September 20, 1992--------------------------------------------------------------------

Only one vendor offers a complete object-oriented systems softwaresolution today: NeXTSTEP from NeXT Computer, Inc. As the New YorkTimes reported on January 6, 1993:

"NeXTSTEP software is generally acknowledged to be substantially ahead of operating systems still under development by industry leaders like IBM, Apple and Microsoft...

The development of NeXTSTEP began in 1986. NeXTSTEP, now in itsthird generation, is a well-integrated object-oriented solution andincludes:

* An operating system based on industry-standard UNIX, providingkernel-level system features optimized for object-orientation.

* A complete programming environment for rapidly prototypingand developing commercial-grade applications built out of reusableobjects, including applications which integrate server, mini- ormainframe-based relational databases. These development tools includeprogramming languages, an applications kit comprising more than onehundred reusable objects, and tools for managing objects and creatinguser interfaces.

None of these features, individually, offers a complete,object-oriented system. Together, they offer a tightly integratedarchitecture designed at the lowest levels of the system to supportobject-oriented computing.

--------------------------------------------------------------------VARS gave NeXTSTEP "the highest score among all companies in allcategories. In its three years on the market, NeXTSTEP has attracteddevelopers with its labor saving abilities to build applications. Byproviding an easier way to build applications, the NeXTSTEPoperating system has allowed VARs and developers to customize moreapplications, which has helped NeXT gain entry into commercialmarkets." -VARBUSINESS, September, 1992--------------------------------------------------------------------

Those who have recognized the superiority of NeXT's object-orientedsystem software include:

* Corporate Computing, which named NeXTSTEP for Intel processors oneof the `best buys' for 1993

* The Software Publisher's Association, which gave NeXTSTEP theFluegelman Award for innovative software

* VARBUSINESS magazine which awarded NeXT its first placeworkstation award for 1992 based on the strengths of NeXTSTEPGiven the opportunity that this market will provide over the nextseveral years and NeXTSTEP's significant lead, NeXT has decided tofocus all of its energies on developing and delivering the industry'smost advanced object-oriented software for corporate desktops.

Given the opportunity that this market will provide over the nextseveral years and NeXTSTEP's significant lead, NeXT has decidedto focus all of its energies on developing and delivering theindustry's most advanced object-oriented software for corporatedesktops.

IV. NeXTSTEP AND CORPORATE COMPUTING IN THE `90's

Desktop corporate computing will be driven by three trends in the90's: 1. Client/server computing 2. Custom in-house applications 3. The movement to integrate information assets and unify the desktop with a single, consistent user interface

--------------------------------------------------------------------"NeXTSTEP...is probably the most respected piece of software on theplanet...The underlying reason for NeXT's success is objects...Thelevel of applications you can create in the standard environment ismuch higher on NeXT than anywhere else."--------------------------------------------------------------------

CLIENT/SERVER COMPUTING

The adoption of client/server computing is being fueled in part bydownsizing, as organizations move database-intensive applications offof larger systems to corporate desktops and servers. Organizationsrelying on custom applications bring end users both substantiallyimproved ease of use as well as expanded access to information. Andthese organizations are viewing this new kind of GUI-based databaseapplication as their competitive edge, particularly if customapplications can be developed and deployed more quickly. Like themovement toward object-oriented operating systems, thedatabase-oriented client/server marketplace will expand dramaticallyover the next several years.

The promise of database-intensive client/server computing cannot berealized unless that architecture is built on an object-orientedfoundation. NeXTSTEP offers a solid foundation for building this newclass of corporate custom applications: the easiest to use (andbuild) graphical user interface in the industry, a thoroughobject-oriented architecture, and a distributed object framework forclient/server computing.

--------------------------------------------------------------------"Developers positively love it... there is simply no betterenvironment for building graphical applications...People who are nowusing the NeXT are nothing short of gaga over it, and their lust isjustified." -Byte Magazine, Outlook `92--------------------------------------------------------------------

"Users, developers, and integrators all reap the benefits of NeXTSTEP's object-oriented scheme. No one who works with a NeXT machine feels like a second-class citizen. In contrast, the immensely popular Windows environment does not extend its benefits to developers, at least not if those developers use Microsoft's own C/C++ tools (which run under DOS)."

Byte, October, 1992

For developers, the benefits of NeXTSTEP's thoroughobject-orientation are:

* Applications are developed five to ten times faster becauseobjects encourage reusability of software components.

* Applications built out of separate modules are easier tomaintain.

* Existing NeXTSTEP objects provide very high levels offunctionality such as database access, text editing, printing,spell-checking, and faxing -- raising the quality of every NeXTSTEPapplication.

* Distributed Object technology allows the objects comprising asingle applications to reside on different machines over a network.

------------------------------------------------------------------"Brilliant. The easiest Unix system on the market... almost theperfect interface. Consistent interface style acrossapplications, a common underlying object-oriented OS, anastounding set of capabilities...The smooth feel of theinterface is light years ahead of anything else available for aUnix user...a seamless computer experience-that shames otheradvanced systems." -SunWorld, March 1992------------------------------------------------------------------

For users, the benefits include:

* In highly competitive industries such as financial servicesand telecommunications where time-to-market is everything,applications are completed far more quickly.

* Applications work alike and are easier to learn since theyall use the same interface components.

* Applications support richer kinds of information sinceobject-oriented computing was designed to integrate multimediainformation easily.

`Programmers felt NeXTSTEP was the only viable choice,' says Vince Jordan, WilTel's director of software development... `What we're building here is a step above anything I've seen on the market... The benefits of object technology far outweighed procedural programming especially in the amount of time it takes to build and test the application,' Jordan says. `Others who have built similar systems told me I'm doing in two years what would otherwise take four to eight years,' he says.

Infoworld, August 24, 1992

--------------------------------------------------------------------NeXTSTEP will enable a revolution in the software industry: a marketfor reusable software components.--------------------------------------------------------------------

Beyond its obvious benefits to corporate developers and users, theobject-oriented revolution will also help the software industry bycreating a new market for commercially reusable objects.

"Nine months ago we predicted that an object marketplace would begin to appear," said Doug McLeod, an analyst at International Data Corporation (IDC). "NeXT's ObjectWare catalog is tangible evidence that this prediction is coming true with NeXTSTEP released in June 1992... Given that NeXTSTEP has been object-oriented from the beginning, it's not surprising that the trend toward component-based software is happening on NeXT first."

INTEGRATING THE CORPORATE DESKTOP WITH NeXTSTEP

Applications development is not the entire story behind the successof NeXTSTEP. Today's corporate customers not only need to developcustom software, they also need to integrate all of their informationresources, custom and shrinkwrap alike, in a consistent userinterface.

The most advanced corporations today are engaged in organization-wideintegration, replacing the myriad of PCs, terminals and workstationsserving different purposes with one desktop computer environmentcapable of integrating a wide range of information resources fromback-end databases through custom applications and commercial `offthe shelf' software. In so doing, they are unifying the desktoparound one graphical user interface. NeXTSTEP provides an excellent,no-compromise foundation for desktop integration. Thanks to itsobject-oriented architecture all applications custom andshrinkwrap can be seamlessly and tightly integrated into oneconsistent, easy to use end-user environment.

--------------------------------------------------------------------"The combination of NeXTSTEP's interface features makes it, by far,the easiest Unix system to use. It reigns as the best example of Unixdone right: It's aimed at ordinary users rather than traditional Unixusers." -Byte Magazine, October 1992--------------------------------------------------------------------

NeXT's customers want the best of both the old and new worlds:advanced NeXTSTEP applications development and functionality togetherwith compatibility with the older world of DOS and Windows. BeyondDOS file system compatibility, NeXTSTEP will offer significantinteroperability with Microsoft Windows applications. All NeXTSTEPapplications can work side by side with DOS, Windows, 3270 andX/Motif applications running in NeXTSTEP windows.

No other vendor - including Microsoft - offers a software platformthat is as good for developing and deploying custom software and forintegrating these with commercially available productivity tools. Ofcritical importance, enterprise-wide client/server computing requiresa client that can be an outstanding platform for both shrinkwrapproductivity applications and custom applications supporting theenterprise's unique business processes. This is why organizations asdifferent as Chrysler Financial, Preferred Health Care, DARPA, BozellJacobs, UBS Securities, the Alberta Motor Vehicles Department andMcCaw Cellular have all chosen NeXTSTEP as a cornerstone of theirdesktop integration strategy.

NeXT believes that these trends the growth of the market forobject-oriented systems software, the spread of custom applicationsfor corporate client/server architectures, a growing corporateinterest in desktop integration, and the availability of inexpensiveworkstation-class personal computers -- all support NeXT's decisionto focus the company on the development of leading-edge and robustsoftware for object-oriented computing.

V. NeXT IN TRANSITION

MANAGING THE TRANSITION TO A SOFTWARE-ONLY COMPANY

In its transition to a purely software company, NeXT emerges as asignificantly more focused company, having a clear mission: to be oneof the dominant suppliers of object-oriented software forclient/server computing in the industry.

--------------------------------------------------------------------NeXT is restructuring its operations to devote more resources to allaspects of its software business. Because NeXT is no longer ahardware supplier, NeXT is eliminating its hardware-relatedoperations. NeXT emerges from this transition a stronger company inevery respect.--------------------------------------------------------------------

In order to apply 100% of its energies to this software mission, NeXThas significantly restructured its organization and operations. Theprimary goal has been to sharply focus the company on object-orientedsystems software. For this reason, NeXT has expanded its softwareteam while, at the same time, eliminating those functions such ashardware engineering and manufacturing not in keeping with itsfundamental mission as a supplier of object-oriented systemssoftware. The decision to eliminate hardware operations was adifficult one for NeXT to make, particularly in view of NeXT'shistory of award-winning hardware innovation. But however difficult,it was a necessary outcome of NeXT's fundamental decision to focus onsoftware that will run on the most widely accepted mainstreamhardware platforms in the industry.

NeXT emerges from this transition not only a more focused company,but also a stronger business. NeXT as a software company has a leaner200-person operation, a healthy cash balance, and a strong capitalbase. NeXT also has a pipeline of orders for NeXTSTEP and emergingalliances with hardware manufacturers which would have been difficultor impossible to develop if NeXT had remained a manufacturer ofproprietary hardware.

NeXTSTEP ON INTEL PROCESSORS

NeXTSTEP for Intel processors will be delivered to customersbeginning on May 25, 1993. This version of NeXTSTEP includes the sameoperating system, the same user interface and the same developmenttools as NeXTSTEP for the Motorola 68040 product family. Applicationswritten for the Motorola architecture require little more than asimple recompilation. Most applications have been ported fromMotorola to Intel architectures in less than one day.

--------------------------------------------------------------------NeXTSTEP on Intel processors will be delivered to customers on May25, 1993.--------------------------------------------------------------------

NeXTSTEP-READY INTEL HARDWARE

By focusing on the Intel architecture, NeXT is turning thecommoditization of the PC industry to its own advantage. NeXTSTEPruns on a broad range of Intel 486 and Pentium hardware. IDCestimates that 26 million 486 computers will be sold in 1993. Many ofthese will be capable of running NeXTSTEP requiring little or noupgrade to do so.

Popular computer brands with configurations ready to run NeXTSTEPinclude: Compaq, Dell, Epson, Gateway, Lucky Goldstar and NEC.NeXTSTEP will also run on transportable and battery powered portablesfrom such popular manufacturers as Altima, Compaq, NEC and Toshiba.

Product lines: object-oriented system software, development tools, reusable objects and groupware available on mainstream hardware. "NeXTSTEP...is probably the most respected piece of software on the planet...The underlying reason for NeXT's success is objects...The level of applications you can create in the standard environment is much higher on NeXT than anywhere else."

"Many view the NeXTSTEP operating system as the most advanced on the market today. Embodying a hot technology called object-oriented programming, it lets customers quickly write new programs and mold existing ones to new uses."

"NeXTSTEP has long been the most approachable of the Unix operating systems available... Corporations looking for an extraordinarily powerful development system with an elegant interface, built-in multimedia and strong PostScript-based output control should give NeXTSTEP a serious look."

"The combination of NeXTSTEP's interface features makes it, by far, the easiest Unix system to use. It reigns as the best example of Unix done right" It's aimed at ordinary users rather than traditional Unix users."

"We found the [NeXTSTEP] object-oriented development environment very easy to work with," explains Mike Adelson of Chrysler Financial. "We believe it will enable us to develop business applications faster."

"NeXTSTEP made it much easier and faster for companies' in-house programmers to customize software to handle important parts of their businesses... O'Connor & Associates, a Chicago options and futures firm, claims its engineers can write a complex trading program in three months with NeXTSTEP vs. over two years on a Sun workstation."

"NeXTSTEP's Interface Builder and its supporting utilities and Objective C compiler provide the easiest-to-use, most powerful programming environment we have seen to date< NeXTSTEP has always been a programmer's playground. Now it's even better."

"NeXTSTEP makes customizing a system easier than anything else I've seen... What might take days of procedural programming to accomplish elsewhere can be reduced to a few hours of tying existing objects together under NeXTSTEP."

NeXTSTEP on Intel processors will be delivered to customers on May25, 1993.

(C)1993 NeXT Computer, Inc. All rights reserved. NeXT, the NeXT logo,NeXTSTEP, and NeXTstation are registered trademarks of NeXT Computer,Inc. Intel is a registered trademark and Pentium is a trademark ofIntel Corp. UNIX is a registered trademark of UNIX Systems Labs.

NeXT has made the decision to become a software company in order todevote all of its resources to becoming a leader in object-orientedsoftware for client/server computing.

CONTENTS

I. Overview: From Hardware to SoftwareII. NeXT's Opportunity: To Lead the Object-OrientedSoftware MarketIII.Why NeXT Will Lead the MarketIV.NeXTSTEP and Corporate Computing in the `90'sV.NeXT in Transition

I. OVERVIEW: FROM HARDWARE TO SOFTWARE

Over the past two years, NeXT has been successful in selling itsobject-oriented NeXTSTEP systems to major corporations, governmentinstitutions and higher education. In 1992, sales increased 10%worldwide to reach $140 million. Commercial acceptance of NeXTSTEP,coupled with the commoditization of the hardware business, hasconvinced NeXT to choose being a first-tier software company leadingthe object-oriented computing revolution over being a second-tiersupplier of hardware in a market increasingly differentiated merelyby hardware price/performance.

NeXT'S MISSION

--------------------------------------------------------------------Mission: to lead the object-oriented computing revolution.--------------------------------------------------------------------

NeXT's mission is to provide state-of-the-art, robust and reliableobject-oriented software that allows users to rapidly develop anddeploy client/server applications. NeXT's corporate goal is to be anindustry leader in object-oriented computing on the broadest array ofmainstream hardware platforms. NeXTSTEP is currently shipping in alimited release for Intel platforms and will be available in anunrestricted release in May. NeXT plans on making NeXTSTEP anindustry standard available on a number of popular, high-performancearchitectures.

--------------------------------------------------------------------Product lines: object-oriented system software, development tools,reusable objects and groupware available on mainstream hardware.--------------------------------------------------------------------

As NeXT moves forward, the company will emphasize technologies whereNeXT adds unique value. NeXT will invest in four product lines:

For the past year, NeXT has been evolving toward a purelysoftware-driven company, beginning in January, 1992, with theannouncement of NeXT's plans to port NeXTSTEP to the Intelarchitecture.

For the past eighteen months, NeXT's customers have advocated thatNeXT become a software-only company. This course of action madeincreasing sense as a new generation of broadly available,inexpensive and appropriate hardware for NeXTSTEP began shipping in1992. With the arrival of NeXTSTEP on Intel processors, NeXT has madethe decision to cease designing and manufacturing its ownNeXTstation hardware.

This customer-driven decision was made for several reasons. First,NeXT's customers want the benefit of NeXTSTEP on industry-standard,user-customizable platforms available from multiple suppliers. Toencourage the broadest possible acceptance of NeXTSTEP on the widestrange of hardware, NeXT understood that it needed to level theplaying field as a platform-neutral software supplier and givecustomers maximum choice and flexibility in the selection of hardwareto run NeXTSTEP.

Second, NeXT's customers want NeXTSTEP to proliferate broadly oncorporate desktops and to capture significant market share. For thepast year, NeXT has realized that the goal of broad market share forNeXTSTEP was at odds with the goal of winning acceptance for aproprietary hardware platform. In the past, to adopt NeXTSTEPrequired making a commitment to NeXT's own hardware as well as toNeXTSTEP itself. In the future, because of the widespreadavailability of Intel hardware, the NeXT-related costs of deployingNeXTSTEP widely will be significantly reduced, resulting in shortenedtechnology adoption and procurement decisions.

Third, today, many hardware vendors offer inexpensive and powerfulplatforms capable of running NeXTSTEP well and freeing NeXT to investin those software technologies to which NeXT can add unique value.

--------------------------------------------------------------------Focusing on the mainstream expands the market for all NeXTSTEPdevelopers.--------------------------------------------------------------------

Finally, one of the most compelling reasons for focusing all ofNeXT's energies on industry-standard platforms is to expand the sizeof the NeXTSTEP marketplace. Today, more than three hundredapplications ship for NeXTSTEP, including products from WordPerfect,Oracle, Sybase, Adobe, Lotus, Insignia, Altsys, Pages, Lighthouse andAppsoft. NeXT's focus on expanding the market share for NeXTSTEP onstandard hardware platforms should greatly increase the number ofapplications available for NeXTSTEP during the next year.

II. NeXT'S OPPORTUNITY: TO LEAD THE OBJECT-ORIENTED SOFTWARE MARKET

"Few in the industry dispute that NeXTSTEP accomplishes today what Taligent, Microsoft and others are aiming for by 1995."

Open Information Systems, January 1993

--------------------------------------------------------------------"It's NeXTSTEP system software is years ahead of its potentialrivals, such as Microsoft's Cairo and Apple and IBM's Taligentsystems." -Business Week, January 25, 1993--------------------------------------------------------------------

A broad spectrum of industry analysts predicts that object-orientedsystems software will be one of the most important enablingtechnologies of the 1990's. The market for desktop object-orientedsystems software, in its infancy today, will be enormous. Accordingto initial estimates from International Data Corporation (IDC),annual revenues from object-oriented system software will surpass $2billion by 1996, exceeding revenues from traditional desktopoperating systems.

With 50,000 users, NeXTSTEP has the largest installed base ofobject-oriented systems software in the industry. NeXT also enjoys aseven-year lead in developing object-oriented software, a lead thathas allowed NeXTSTEP to mature as a complete and integratedarchitecture. NeXTSTEP will have already shipped its fourth releaseby the time that NeXT's only foreseeable competitors Microsoft'sCairo and Taligent's OS ship the initial release of their products intwo to three years.

--------------------------------------------------------------------NeXTSTEP will be in its fourth major release before Cairo or Taligentship their first release.--------------------------------------------------------------------

--------------------------------------------------------------------"`NeXTSTEP is the only object-oriented environment out there,' saidNancy Battey, an analyst at IDC in Mountain View. `They have a hugelead.'" -San Jose Mercury News, September 20, 1992--------------------------------------------------------------------

Only one vendor offers a complete object-oriented systems softwaresolution today: NeXTSTEP from NeXT Computer, Inc. As the New YorkTimes reported on January 6, 1993:

"NeXTSTEP software is generally acknowledged to be substantially ahead of operating systems still under development by industry leaders like IBM, Apple and Microsoft...

The development of NeXTSTEP began in 1986. NeXTSTEP, now in itsthird generation, is a well-integrated object-oriented solution andincludes:

* An operating system based on industry-standard UNIX, providingkernel-level system features optimized for object-orientation.

* A complete programming environment for rapidly prototypingand developing commercial-grade applications built out of reusableobjects, including applications which integrate server, mini- ormainframe-based relational databases. These development tools includeprogramming languages, an applications kit comprising more than onehundred reusable objects, and tools for managing objects and creatinguser interfaces.

None of these features, individually, offers a complete,object-oriented system. Together, they offer a tightly integratedarchitecture designed at the lowest levels of the system to supportobject-oriented computing.

--------------------------------------------------------------------VARS gave NeXTSTEP "the highest score among all companies in allcategories. In its three years on the market, NeXTSTEP has attracteddevelopers with its labor saving abilities to build applications. Byproviding an easier way to build applications, the NeXTSTEPoperating system has allowed VARs and developers to customize moreapplications, which has helped NeXT gain entry into commercialmarkets." -VARBUSINESS, September, 1992--------------------------------------------------------------------

Those who have recognized the superiority of NeXT's object-orientedsystem software include:

* Corporate Computing, which named NeXTSTEP for Intel processors oneof the `best buys' for 1993

* The Software Publisher's Association, which gave NeXTSTEP theFluegelman Award for innovative software

* VARBUSINESS magazine which awarded NeXT its first placeworkstation award for 1992 based on the strengths of NeXTSTEPGiven the opportunity that this market will provide over the nextseveral years and NeXTSTEP's significant lead, NeXT has decided tofocus all of its energies on developing and delivering the industry'smost advanced object-oriented software for corporate desktops.

Given the opportunity that this market will provide over the nextseveral years and NeXTSTEP's significant lead, NeXT has decidedto focus all of its energies on developing and delivering theindustry's most advanced object-oriented software for corporatedesktops.

IV. NeXTSTEP AND CORPORATE COMPUTING IN THE `90's

Desktop corporate computing will be driven by three trends in the90's: 1. Client/server computing 2. Custom in-house applications 3. The movement to integrate information assets and unify the desktop with a single, consistent user interface

--------------------------------------------------------------------"NeXTSTEP...is probably the most respected piece of software on theplanet...The underlying reason for NeXT's success is objects...Thelevel of applications you can create in the standard environment ismuch higher on NeXT than anywhere else."--------------------------------------------------------------------

CLIENT/SERVER COMPUTING

The adoption of client/server computing is being fueled in part bydownsizing, as organizations move database-intensive applications offof larger systems to corporate desktops and servers. Organizationsrelying on custom applications bring end users both substantiallyimproved ease of use as well as expanded access to information. Andthese organizations are viewing this new kind of GUI-based databaseapplication as their competitive edge, particularly if customapplications can be developed and deployed more quickly. Like themovement toward object-oriented operating systems, thedatabase-oriented client/server marketplace will expand dramaticallyover the next several years.

The promise of database-intensive client/server computing cannot berealized unless that architecture is built on an object-orientedfoundation. NeXTSTEP offers a solid foundation for building this newclass of corporate custom applications: the easiest to use (andbuild) graphical user interface in the industry, a thoroughobject-oriented architecture, and a distributed object framework forclient/server computing.

--------------------------------------------------------------------"Developers positively love it... there is simply no betterenvironment for building graphical applications...People who are nowusing the NeXT are nothing short of gaga over it, and their lust isjustified." -Byte Magazine, Outlook `92--------------------------------------------------------------------

"Users, developers, and integrators all reap the benefits of NeXTSTEP's object-oriented scheme. No one who works with a NeXT machine feels like a second-class citizen. In contrast, the immensely popular Windows environment does not extend its benefits to developers, at least not if those developers use Microsoft's own C/C++ tools (which run under DOS)."

Byte, October, 1992

For developers, the benefits of NeXTSTEP's thoroughobject-orientation are:

* Applications are developed five to ten times faster becauseobjects encourage reusability of software components.

* Applications built out of separate modules are easier tomaintain.

* Existing NeXTSTEP objects provide very high levels offunctionality such as database access, text editing, printing,spell-checking, and faxing -- raising the quality of every NeXTSTEPapplication.

* Distributed Object technology allows the objects comprising asingle applications to reside on different machines over a network.

------------------------------------------------------------------"Brilliant. The easiest Unix system on the market... almost theperfect interface. Consistent interface style acrossapplications, a common underlying object-oriented OS, anastounding set of capabilities...The smooth feel of theinterface is light years ahead of anything else available for aUnix user...a seamless computer experience-that shames otheradvanced systems." -SunWorld, March 1992------------------------------------------------------------------

For users, the benefits include:

* In highly competitive industries such as financial servicesand telecommunications where time-to-market is everything,applications are completed far more quickly.

* Applications work alike and are easier to learn since theyall use the same interface components.

* Applications support richer kinds of information sinceobject-oriented computing was designed to integrate multimediainformation easily.

`Programmers felt NeXTSTEP was the only viable choice,' says Vince Jordan, WilTel's director of software development... `What we're building here is a step above anything I've seen on the market... The benefits of object technology far outweighed procedural programming especially in the amount of time it takes to build and test the application,' Jordan says. `Others who have built similar systems told me I'm doing in two years what would otherwise take four to eight years,' he says.

Infoworld, August 24, 1992

--------------------------------------------------------------------NeXTSTEP will enable a revolution in the software industry: a marketfor reusable software components.--------------------------------------------------------------------

Beyond its obvious benefits to corporate developers and users, theobject-oriented revolution will also help the software industry bycreating a new market for commercially reusable objects.

"Nine months ago we predicted that an object marketplace would begin to appear," said Doug McLeod, an analyst at International Data Corporation (IDC). "NeXT's ObjectWare catalog is tangible evidence that this prediction is coming true with NeXTSTEP released in June 1992... Given that NeXTSTEP has been object-oriented from the beginning, it's not surprising that the trend toward component-based software is happening on NeXT first."

INTEGRATING THE CORPORATE DESKTOP WITH NeXTSTEP

Applications development is not the entire story behind the successof NeXTSTEP. Today's corporate customers not only need to developcustom software, they also need to integrate all of their informationresources, custom and shrinkwrap alike, in a consistent userinterface.

The most advanced corporations today are engaged in organization-wideintegration, replacing the myriad of PCs, terminals and workstationsserving different purposes with one desktop computer environmentcapable of integrating a wide range of information resources fromback-end databases through custom applications and commercial `offthe shelf' software. In so doing, they are unifying the desktoparound one graphical user interface. NeXTSTEP provides an excellent,no-compromise foundation for desktop integration. Thanks to itsobject-oriented architecture all applications custom andshrinkwrap can be seamlessly and tightly integrated into oneconsistent, easy to use end-user environment.

--------------------------------------------------------------------"The combination of NeXTSTEP's interface features makes it, by far,the easiest Unix system to use. It reigns as the best example of Unixdone right: It's aimed at ordinary users rather than traditional Unixusers." -Byte Magazine, October 1992--------------------------------------------------------------------

NeXT's customers want the best of both the old and new worlds:advanced NeXTSTEP applications development and functionality togetherwith compatibility with the older world of DOS and Windows. BeyondDOS file system compatibility, NeXTSTEP will offer significantinteroperability with Microsoft Windows applications. All NeXTSTEPapplications can work side by side with DOS, Windows, 3270 andX/Motif applications running in NeXTSTEP windows.

No other vendor - including Microsoft - offers a software platformthat is as good for developing and deploying custom software and forintegrating these with commercially available productivity tools. Ofcritical importance, enterprise-wide client/server computing requiresa client that can be an outstanding platform for both shrinkwrapproductivity applications and custom applications supporting theenterprise's unique business processes. This is why organizations asdifferent as Chrysler Financial, Preferred Health Care, DARPA, BozellJacobs, UBS Securities, the Alberta Motor Vehicles Department andMcCaw Cellular have all chosen NeXTSTEP as a cornerstone of theirdesktop integration strategy.

NeXT believes that these trends the growth of the market forobject-oriented systems software, the spread of custom applicationsfor corporate client/server architectures, a growing corporateinterest in desktop integration, and the availability of inexpensiveworkstation-class personal computers -- all support NeXT's decisionto focus the company on the development of leading-edge and robustsoftware for object-oriented computing.

V. NeXT IN TRANSITION

MANAGING THE TRANSITION TO A SOFTWARE-ONLY COMPANY

In its transition to a purely software company, NeXT emerges as asignificantly more focused company, having a clear mission: to be oneof the dominant suppliers of object-oriented software forclient/server computing in the industry.

--------------------------------------------------------------------NeXT is restructuring its operations to devote more resources to allaspects of its software business. Because NeXT is no longer ahardware supplier, NeXT is eliminating its hardware-relatedoperations. NeXT emerges from this transition a stronger company inevery respect.--------------------------------------------------------------------

In order to apply 100% of its energies to this software mission, NeXThas significantly restructured its organization and operations. Theprimary goal has been to sharply focus the company on object-orientedsystems software. For this reason, NeXT has expanded its softwareteam while, at the same time, eliminating those functions such ashardware engineering and manufacturing not in keeping with itsfundamental mission as a supplier of object-oriented systemssoftware. The decision to eliminate hardware operations was adifficult one for NeXT to make, particularly in view of NeXT'shistory of award-winning hardware innovation. But however difficult,it was a necessary outcome of NeXT's fundamental decision to focus onsoftware that will run on the most widely accepted mainstreamhardware platforms in the industry.

NeXT emerges from this transition not only a more focused company,but also a stronger business. NeXT as a software company has a leaner200-person operation, a healthy cash balance, and a strong capitalbase. NeXT also has a pipeline of orders for NeXTSTEP and emergingalliances with hardware manufacturers which would have been difficultor impossible to develop if NeXT had remained a manufacturer ofproprietary hardware.

NeXTSTEP ON INTEL PROCESSORS

NeXTSTEP for Intel processors will be delivered to customersbeginning on May 25, 1993. This version of NeXTSTEP includes the sameoperating system, the same user interface and the same developmenttools as NeXTSTEP for the Motorola 68040 product family. Applicationswritten for the Motorola architecture require little more than asimple recompilation. Most applications have been ported fromMotorola to Intel architectures in less than one day.

--------------------------------------------------------------------NeXTSTEP on Intel processors will be delivered to customers on May25, 1993.--------------------------------------------------------------------

NeXTSTEP-READY INTEL HARDWARE

By focusing on the Intel architecture, NeXT is turning thecommoditization of the PC industry to its own advantage. NeXTSTEPruns on a broad range of Intel 486 and Pentium hardware. IDCestimates that 26 million 486 computers will be sold in 1993. Many ofthese will be capable of running NeXTSTEP requiring little or noupgrade to do so.

Popular computer brands with configurations ready to run NeXTSTEPinclude: Compaq, Dell, Epson, Gateway, Lucky Goldstar and NEC.NeXTSTEP will also run on transportable and battery powered portablesfrom such popular manufacturers as Altima, Compaq, NEC and Toshiba.

Product lines: object-oriented system software, development tools, reusable objects and groupware available on mainstream hardware. "NeXTSTEP...is probably the most respected piece of software on the planet...The underlying reason for NeXT's success is objects...The level of applications you can create in the standard environment is much higher on NeXT than anywhere else."

"Many view the NeXTSTEP operating system as the most advanced on the market today. Embodying a hot technology called object-oriented programming, it lets customers quickly write new programs and mold existing ones to new uses."

"NeXTSTEP has long been the most approachable of the Unix operating systems available... Corporations looking for an extraordinarily powerful development system with an elegant interface, built-in multimedia and strong PostScript-based output control should give NeXTSTEP a serious look."

"The combination of NeXTSTEP's interface features makes it, by far, the easiest Unix system to use. It reigns as the best example of Unix done right" It's aimed at ordinary users rather than traditional Unix users."

"We found the [NeXTSTEP] object-oriented development environment very easy to work with," explains Mike Adelson of Chrysler Financial. "We believe it will enable us to develop business applications faster."

"NeXTSTEP made it much easier and faster for companies' in-house programmers to customize software to handle important parts of their businesses... O'Connor & Associates, a Chicago options and futures firm, claims its engineers can write a complex trading program in three months with NeXTSTEP vs. over two years on a Sun workstation."

"NeXTSTEP's Interface Builder and its supporting utilities and Objective C compiler provide the easiest-to-use, most powerful programming environment we have seen to date< NeXTSTEP has always been a programmer's playground. Now it's even better."

"NeXTSTEP makes customizing a system easier than anything else I've seen... What might take days of procedural programming to accomplish elsewhere can be reduced to a few hours of tying existing objects together under NeXTSTEP."

NeXTSTEP on Intel processors will be delivered to customers on May25, 1993.

(C)1993 NeXT Computer, Inc. All rights reserved. NeXT, the NeXT logo,NeXTSTEP, and NeXTstation are registered trademarks of NeXT Computer,Inc. Intel is a registered trademark and Pentium is a trademark ofIntel Corp. UNIX is a registered trademark of UNIX Systems Labs.